- Pound (GBP) is rising after gains yesterday
- BoE is expected to leave rates unchanged
- Euro (EUR) falls amid a quiet economic calendar
- ECB is expected to continue cutting rates
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.32% in the previous session, settling on Tuesday at €1.1841 and trading in a range between €1.1826 and €1.1881. At 09:00 UTC, GBP/EUR trades 0.18% at €1.1862.
The pound is inching higher against the euro on the US dollar ahead of the Bank of England’s interest rate decision at 12 BST.
The central bank is widely expected to leave interest rates unchanged at 5% after narrowly voting to cut rates from a 15-year high in the August meeting.
Today’s rate decision comes after data yesterday showed that inflation in some areas of the economy remained sticky.
While UK inflation, as measured by the consumer price index, held steady at 2.2%, service sector inflation rose by more than expected to 5.6%. Core inflation was also higher.
The data suggests that inflation is still too sticky to warrant another can’t by the Bank of England. However, investors will be watching out for clues that the Bank of England will cut again in November.
The market is pricing in a 25-basis-point cut again in November and possibly a further 25-basis-point cut in December.
The euro is modestly weaker amid a quiet economic calendar. Yesterday’s inflation figures showed that consumer prices in the eurozone rose 2.2% year over year in August but just 0.1% monthly.
ECB policymakers support the central bank cutting interest rates again, although they are careful not to set a fixed path to rate cuts.
In the meeting last week, the ECB said it would continue with a meeting-by-meeting approach to reducing rates.
